Hi Michael,

>The issue, our client is just getting started and has limited funds. The product being created will before resale and our client has offered percetage of each copy copy sold. Our current contract is kinda of open ended because of this.
>

Beware this kind of client. The one who thinks their product is so great that it can be resold. It sounds to me like they want you to agree to develop the software for the amount in their limited budget (most likely no where near what the actual cost will be), then promise "royalties" on copies sold. Have they shown you their market research for and business plan to determine the actual market and projected sales for this product? Have they thought about how they are going to support the product? Offer upgrades and enhancements? My advice, don't do it. You are going to be the one loosing out in the end.

If you decide to do it find a good Intellectual Property/Computer Law attorney. Make sure your contract states that you are going to be paid for all the work you do developing the application. You own the code and give them license to use it in their business first. Then if that implementation is successful and they have proven to you there is a market for the product re-negotiate for royalties. If they want code ownership, don't give it to them until they have paid you in full for all of your development work. Of course, don't forget that there is a price for code ownership. If you transfer it to them you can't use any of the code used to create his application again (all of your generic routines, security systems, error handling, menuing systems, toolbars, etc.). It will all have to be redone for your next client. Make sure they pay you for this if you assign them ownership.

>Now our client has now asked for a clause to terminate the contract before he signs, along with other little modifcations of course. We are trying to come up with a fair buy out price for the software so we are not anything as well.
>

How can you terminate a contract before signing it?

>Initial specs, looking my specs over i figure 6 data forms and another 7 for utilities, report, etc. and then problably 6 or so reports. I know I not being exact, but I'm only looking for an estimate. The client will obviousily want ownership of the source.<

Just because they are paying you to develop an application for them doesn't mean they automatically own the code. US Copyright Law states that you own the code by default, you have to specifically assign them ownership in a written contract.

HTH,
Jacci